Taiwan elections; Liu He coming to DC; Spring Festival travel starts Friday

The Chinese have officially confirmed that Vice Premier Liu He is leading a delegation to Washington DC on January 13 for the January 15 signing of the phase one trade deal.

There have been a lot of hot takes about how weak the deal is but I am still in the dark about what is actually in it. I will make a courageous, wild guess that both sides will have domestic criticism, however muted it may be in the PRC, and that in fact the reason the Chinese side has been so relatively quiet about the details is that they conceded more than they wanted to, because Xi decided it was time to try to stabilize the relationship, however narrowly and temporarily.

I find it interesting that Taoran Notes, the very accurate chronicler of the trade talks, has been silent since November 5. Maybe he felt there was no need to keep writing since a deal was done, but one hypothesis I have heard is that his silence is part of an overall directive from Xi to ensure that there is only one voice talking about the trade deal, namely his.

Perhaps more will be revealed next Wednesday.

The Taiwan election is Saturday. President Tsai Ing-wen’s campaign released a very powerful ad comparing, in split screen, the freedom and prosperity in Taiwan with the current situations in Hong Kong and Xinjiang. Here it is on Youtube, with English subtitles:

Thanks for reading.


The Essential Eight

1. US-China

China to Send Chief Trade Negotiator to U.S. to Sign Phase-One Deal - WSJ $$

The Chinese delegation, to be led by Vice Premier Liu He, will visit Washington from Monday to Wednesday, Commerce Ministry spokesman Gao Feng said at a weekly briefing....

Mr. Liu will lead a 10-member delegation to Washington, the people familiar with the matter said. The delegation includes: Zhong Shan, China’s commerce minister; Yi Gang, governor of China’s central bank; Ning Jizhe, a top official at the country’s economic-planning agency; Liao Min, vice finance minister and trusted aide to Mr. Liu; Zheng Zeguang, vice foreign minister; Wang Zhijun, vice minister of industry and information technology; Han Jun, vice agriculture minister; and Wang Shouwen, vice commerce minister.

Comment: So far we have not been invited to the signing ceremony or the after-Party

China Delegation to Visit U.S. to Sign ‘Phase One’ Trade Pact - Caixin

Gao [Feng] also said that China will improve its quota management for wheat, corn, and rice based on World Trade Organization rules, which doesn't conflict with expanded U.S. agricultural product imports, according to Chinese state media reports.

Signing phase one deal just a new beginning - Global Times

Despite its perceived limitations, the phase one agreement opens a favorable path for Beijing and Washington that could lead to amicable solutions even during tremendous hostility and seemingly endless tension. All parties should cherish this opportunity, rather than undermine it.

社评:对华贸易战让中国人更加成熟自信

Global Times editorial on how the trade war has made the Chinese people more mature and self-confident

China’s manufacturing exodus set to continue in 2020, despite prospect of trade war deal | South China Morning Post

This is a situation playing out in boardrooms around the world, as international companies accept the reality that the US-China phase one trade deal will not materially improve the lay of the land for their Chinese-based operations.

Rising labour and environmental costs, a head-spinning regulatory environment, the ever-looming threat of more and higher tariffs, along with a sharp increase in the perception of risk associated with living and working in China mean that the manufacturing exodus that began at the tail end of the last decade will continue well into this one.

Wu Xinbo on the ‘Transformation’ of US-China Relations – The Diplomat

An interview with the Dean of Fudan University’s Institute of International Studies and Director of Fudan’s Center for American Studies.

At present, Sino-U.S. relations are in an important stage of transformation. During this transition period, relations have two characteristics: first, there will be some drastic fluctuations in Sino-U.S. relations, and, second, there will be important adjustments in the structure, framework, and methods of interaction in Sino-U.S. relations. In the long run, competition and friction between China and the United States will increase. This is inevitable, but is this Sino-U.S. competition ideological?

At all levels of society, some people in the United States advocate political and ideological competition with China, but China did not intend to enter into such ideological competition. The essence of Sino-U.S. competition is that of national strength centered on economic competition, not political and ideological competition...

In a sense, the world is gradually entering a “post-American hegemonic era.” Whether an ally or enemy of the United States, all feel that the operation of the world economy will no longer revolves around the United States, and world politics will enter an era of multipolarity. All feel that the era of unipolarity has officially ended. For the United States, its world status and influence are gradually declining, and its international reputation has been severely weakened.

Doubts over phase one trade deal as US-China ties ‘still in deep trouble’ | South China Morning Post

That is the view of Jia Qingguo, one of Beijing’s top foreign policy experts and a professor of international studies at Peking University.

“Despite the recent announcement that we are going to have the first phase agreement, [the] relationship between China and the US is still in deep trouble and is heading south rather than north. It is getting worse,” Jia told the Regional Outlook Forum 2020 hosted by the ISEAS Yusof Ishak Institute in Singapore on Thursday.


2. Taiwan election

Don't read too much into election results, Taiwan tells China before vote - Reuters

“I just don’t think China should read Taiwan’s election as its own victory or defeat,” Foreign Minister Joseph Wu told reporters in Taipei.

“If China reads too much into our election ... there might be a likely scenario that China will engage in military intimidation or diplomatic isolation or using economic measures as punishment against Taiwan.”

China Steps Up Its Information War in Taiwan - Rush Doshi - Foreign Affairs

China’s efforts go far beyond spreading disinformation and stale state propaganda. Beijing’s ambition is to shape the production, dissemination, and consumption of information in Taiwan. And as my colleagues and I argue in a forthcoming Brookings report, these efforts foreshadow a sophisticated strategy to influence every stage of the global information supply chain, from the people who produce content to the institutions that publish it and the platforms that deliver it directly to consumers. Democracies around the world should pay close attention to what happens in Taiwan’s election—for their own journalists, media companies, and platforms are fast becoming the focus of similar efforts by Beijing.

Beijing ‘spy’ death threat claims shake up Taiwan’s election campaign as race enters final days | South China Morning Post

On Thursday, the KMT was swift to deny it had threatened Wang or coerced him to record any message attacking the DPP.

“I have nothing to do with the [threat],” Alex Tsai said in Taipei.

He said the mainland businessman – whom he identified as Sun Tianqun – apparently told Wang he could give him money to help repay his debts so that Wang would retract what Sun saw as a fake account by Wang about Xiang and Kung.

Kung and Xiang, whom Sun reportedly described as a close friend, have been detained in Taiwan since they visited the island in late November.

Alex Tsai also claimed that according to Sun, the DPP bribed Wang to accuse Xiang of being a mainland spy. But Alex Tsai admitted that he did not hear the bribery allegations directly from Wang.

Spy scandal rocks Taiwan ahead of weekend elections - The Telegraph

Speaking to reporters in Taipei, Alex Tsai, the KMT official named in the story, confirmed he had spoken to Mr Wang, but denied threatening him or offering inducements. “It has nothing to do with Taiwan’s elections,” he stressed.

"Wang Liqiang is not a spy. That is sure,” he said, claiming that he had contacted Mr Wang to negotiate to clear the name of a Chinese businessman he had implicated in his espionage accusations.

“Both are not Communist spies. Some people say that they're spies working to infiltrate Taiwan, but they've got the wrong person. It's a serious violation of human rights,” he said.

The press conference - 【完整公開】LIVE 要求王立強反咬民進黨? 蔡正元召開記者會說明 - YouTube

Thousands More Overseas Taiwanese Register For Key Elections Than For Last Vote : NPR

A total of 5,328 overseas Taiwanese have applied to vote in the upcoming elections, more than twice the number in 2016, according to Taiwan's cabinet-level Overseas Community Affairs Council. Of this year's total, 5,100 ultimately qualified to vote.


3. Official inflation looks under control

China’s Steadying Inflation Leaves Door Open for Monetary Easing - Bloomberg

China’s consumer inflation steadied in December while factory price declines moderated, leaving room for monetary easing to cement a recent stabilization in economic growth...

The consumer price index rose 4.5% last month from a year earlier, matching November’s rate and halting the recent acceleration fueled by surging pork prices. The producer price index declined 0.5% from a year earlier versus a 1.4% drop in November.

While pork prices -- a key element in the country’s CPI basket -- rose 97% from a year ago, that was actually slower than increases seen in October and November. They fell 5.6% in December from November.


4. Higher education admission quotas

Depth of opposition to Chinese admissions quotas revealed | Times Higher Education (THE)

Xiaolei Qin of Nanjing Normal University and Ross Buchanan of the University of Texas at Austin describe the provincial quotas linked to the notoriously stressful gao kao admissions tests as “a blatant violation of citizens’ rights to educational equality granted by China’s constitution”.

Writing in Higher Education Policy, they say the quota system “strongly favours” students from the three big cities of Beijing, Shanghai and Tianjin, who can typically enter top universities with “dramatically lower” gao kao scores than those from 23 provinces, even though provincial students already have “fewer education resources at their disposal”. About 10 million young people take the test each year.

The paper - Policy and Public Preferences Regarding the University Enrollment Quotas System across Chinese Provinces | SpringerLink

In this article, we find evidence that this policy negatively affects the public’s preferences regarding the university enrollment quotas policy after examining the relationship between changes in university enrollment quotas and public preference in 23 Chinese provinces from 2011 through 2016. This relationship is consistent with what is predicted by the “thermostatic” responsiveness model, which has only been tested in democracies until now. We also test whether government policy is responsive to public preferences and find that government policy is not responsive to the general public in this issue domain. Our findings support the argument for deep reform of the university enrollment quota policy to address the core disparities in quotas across provinces and improve equal access to higher education in China.

China's rural students continue to enjoy favorable policies in college admission - Xinhua 

Students from China's rural and poor areas will continue to enjoy favorable policies when they apply for major universities in 2020, according to a circular released by the Ministry of Education.

China will continue to carry out special enrollment plans to enable more students from rural and impoverished areas to go to major universities and colleges, said the circular, adding that a stricter review on the qualifications of the applicants will be placed.


5. Huawei

'Shot across the bow': U.S. steps up pressure on UK ahead of Huawei decision - Reuters

Britain is expected to make a final call on how to deploy Huawei equipment in its future 5G networks later this month, weighing U.S.-led allegations that the equipment could be used for Chinese state spying against Britain’s relationship with Beijing and industry warnings that banning the firm outright would cost billions of dollars...

U.S. Secretary of State Mike Pompeo is expected to press British Foreign Secretary Dominic Raab over Huawei at a meeting in Washington on Thursday, the sources said.

Ahead of the decision, Washington had also planned to send a delegation, including deputy national security adviser Matt Pottinger, to meet with British officials this week, sources said. But the trip was cancelled at the last minute, two of the people said, due to bad weather.

Huawei in Talks With Banks to Raise $2 Billion — The Information $$ 

It is unclear how many of the banks will actually come on board and how much Huawei will end up raising, the people said. While Huawei has worked with international banks for many years, the U.S. government’s attacks on Huawei could make some lenders reluctant to get too involved because of the potential risk of being associated with the company. That makes the outcome of the fundraising an important signal for Huawei’s ability to expand.

Try as It Might, Germany Isn’t Warming to Huawei – The Diplomat

Following a government announcement in mid-October that Huawei would in principle be permitted to supply components for Germany’s 5G networks, senior representatives of virtually all German political parties have come forward to condemn these plans, with only the left-wing party “Die Linke” remaining mute about the issue. Party leaders and senior lawmakers across the political spectrum have published a steady stream of op-eds, position papers, and official statements warning against Huawei’s involvement in 5G development. Among the multitude of prominent policymakers and officials in Germany who have spoken out against Huawei, some – especially in the Foreign Ministry and the German intelligence agencies – have indeed raised concerns about the U.S. stance and the future of transatlantic cooperation. But overall, these concerns have been less relevant than is often portrayed.

Chinese experts warn Germany, EU to weigh 5G issue carefully - Global Times

Barring Huawei in Germany for so-called national security reasons would be a "discriminative and unjust" decision, Wang Weidong, commercial counselor of the Chinese Embassy in Germany, said in an exclusive interview over the weekend.

If Germany passes laws that bar Huawei from participating in local 5G construction without showing solid evidence, China will not "sit idle," Wang said, noting that companies from the European nation have reaped massive benefits from the Chinese market.

"Germany's firms have been operating in China and participating in the construction of local industries for years, and benefiting a lot from the Chinese market," Wang said. "If Huawei is excluded, it will release both a wrong signal of protectionism and a negative message to China-Germany economic cooperation and even cause a setback for bilateral relations."

US lawmaker seeks ban on sharing intelligence with countries that use Huawei’s 5G networks | South China Morning Post

US Senator Tom Cotton on Wednesday introduced a bill that would prevent the United States from sharing intelligence with countries that allow Chinese telecoms giant Huawei Technologies to operate 5G network technology within their borders, according to a copy of the bill seen by Reuters.

Veiligheidsdiensten waarschuwen regering voor 5G van Huawei [Belgian Security services warn government against 5G from Huawei] | De Morgen

From Google translate: "It looks like the government is going to ban technology from the Chinese Huawei for the new 5G networks, although without saying so in so many words. The security services recommend the second highest safety level."

Brazil to reject US pressure on Huawei 5G bid, minister says | South China Morning Post

Brazil will not accept any pressure from the US over whether to allow the Chinese company Huawei to bid for its 5G network, Marcos Pontes, the minister for science, technology, innovation and communications, said.

Charest advising Huawei in Meng Wanzhou case and on 5G networks - The Globe and Mail

Former Quebec premier Jean Charest, who is contemplating a run for the Conservative Party leadership, has been acting as a consultant to Huawei Technologies Co. Ltd. in the Meng Wanzhou extradition case and the tech giant’s efforts to participate in Canada’s 5G wireless networks, a source says.

Mr. Charest is part of a team at the law firm of McCarthy Tétrault, including former privy council clerk Wayne Wouters, that Huawei retained in the summer to offer strategic advice.


6. South China Sea

Total Competition - China’s Challenge in the South China Sea | Center for a New American Security - By Patrick M. Cronin and Ryan Neuhard

This report argues that China is waging total competition in the South China Sea. Beijing’s campaign of total competition, like George Kennan’s concept of “political warfare,” involves the use of all tools at the state’s disposal short of war. Total competition differs from ordinary competition in its virtually unrestricted execution. It includes illegitimate and destabilizing methods that are ordinarily avoided by benign competitors. China’s total competition or political warfare campaign has five essential pillars: economic power, information dominance, maritime power, psychological warfare, and “lawfare.”

In short, China now appears to be an unstoppable force in the South China Sea. Despite its apparent doubts, China would like for the world to think that it will inevitably dominate the region.

Indonesia: Jokowi Vows to Enforce Maritime Rights amid China Tensions - RFA

A deputy of operations at the Maritime Security Agency (Bakamla), Chokky Hutabarat, said the Chinese ships had begun sailing away from Indonesia’s EEZ.

“We expelled them. They have moved away to the north,” he told BenarNews, an RFA-affiliated online news service.

Jakarta has deployed at least eight warships in the region off the Natunas to ward off encroaching Chinese fishing vessels, and sent four F-16 fighter jets to the area on Tuesday.

China's Ambassador Regarding Natuna: Friends with Different Views - Tempo.co

In response to the recent dispute over the Northern Natuna Sea border, Chinese Ambassador to Indonesia Xiao Qian likens the bilateral relations between Indonesia and China as “two friends who share different views.” 

“China and Indonesia, we are friendly countries and we have wonderful relationships that cover so many areas,” said Ambassador Xiao Qian in his visit at the IDX today, January 8.

Vietnam verifying information on Chinese vessel approaching its waters - VnExpress International

Vietnam is following up on information regarding a Chinese coast guard ship approaching Vietnamese waters following South China Sea tensions involving Indonesia.

"Vietnamese authorities constantly monitor all activities on Vietnamese sea regions as determined by the United Nations Convention for the Law of the Sea (UNCLOS)," Foreign Ministry spokeswoman Le Thi Thu Hang said at Thursday’s press meet.


7. Spring Festival travel starts Friday

China ready for Spring Festival travel rush - Xinhua

Chinese authorities will take multiple measures to ensure a smooth Spring Festival travel rush, with around 440 million trips to be made via railway.

From Jan. 10 to Feb. 18, the total number of trips is likely to hit 3 billion, slightly up from the travel rush last year, with an 8-percent growth in train trips, 8.4-percent increase in air trips and 9.6-percent hike in waterway trips, Zhao Chenxin, spokesperson for the National Development and Reform Commission, told a news conference Thursday.

Due to the continued expansion in high-speed railway operational length, the number of road trips is expected to decline to 2.43 billion.

The Spring Festival this year falls on Jan. 25, coming earlier than previous years


8. Myth of efficient China?

Efficient China | Echowall - Hui Zhou

Such praise of Chinese efficiency generally focuses on two aspects: first, that the Chinese government has ample resources to put in; and secondly, that the Chinese government has formidable powers of administrative enforcement, which are not restricted by such forces as public opinion.

But there are two crucial questions we should think seriously about before we reach conclusions about the Chinese experience and extend it to possible lessons for the world. First, where does all of this money come from? And second, why does the government enjoy such powers of enforcement.

Before we answer these key questions, it is impossible to draw conclusions about whether or not these administrative superpowers are really solutions to the problems the world faces.

A long, interesting piece.


Business, Economy and Trade

Rural Bank, Ratings Agency Part Company After Threatened Credit Downgrade - Caixin Comment: Ratings shopping, as firms in the US did in the run-up to the 2008 crash, is never a good idea// A top Chinese credit ratings company that warned it may cut its ranking on a small rural bank has been dropped by the lender in favor of a rival firm, adding to concerns about the health of the financial institution and the impartiality of the credit ratings industry. Shanxi Yuncheng Rural Commercial Bank Co. Ltd. ditched China Chengxin International Credit Rating Co. Ltd. last week, five months after the company downgraded (link in Chinese) its outlook on the lender to “negative” from “stable,” a sign that it was considering cutting Yuncheng Rural’s A+ rating. Chengxin had said it was concerned about the impact of rising overdue loans and weakening profitability on the bank’s financial strength, and that increasing numbers of borrowers were repaying their debts by handing over assets rather than money.

China lets local govts issue general purpose bonds early to spur investment - Reuters The front-loaded bond quota is intended to be used up before March, the sources said. China sets its yearly quotas for local government bond issuance at its annual parliamentary meeting in March. "The front-loaded 500 billion yuan in new issuance for general-purpose bonds was given as oral guidance, there is no formal document," one of the sources said, speaking on the condition of anonymity. The source added that the market impact was likely to be minimal, as local governments were also allowed to front-load issuance last year. Local governments issued 580 billion yuan worth of new general-purpose bonds early in 2019.

Beijing-Shanghai High-Speed Rail on Track for $4.4 Billion IPO - Caixin Beijing-Shanghai High-Speed Railway Co. Ltd. announced its IPO will raise about 30.7 billion yuan ($4.4 billion), after it set its price at 4.88 yuan per share, according to a Friday announcement to the Shanghai Stock Exchange. The deal involving sale of about 6.3 billion shares, or 12.8% of its total, was priced to give the company a price-to-earnings ratio of about 23.

Revolutionary SOE reform taking place - Global Times Despite China-US trade tensions and some new skepticism about the direction of China's reforms, state-owned enterprises (SOEs) are set to change radically. A new large-scale reorganization is about to begin, and it could revolutionize the efficiency of the sector and boost overall national growth. The quantity of administrative-guideline documents concerning the deepening of SOE reform, with the new theme of mixed-ownership restructuring (MOR), has been overwhelming. The high number of documents might indicate this is one of the most important initiatives in the history of Chinese SOE reform. - The author is chief investment officer at China Resources Capital

China, Laos sign agreement on local currency cooperation - Xinhua The agreement, signed between the PBOC and the Bank of Lao PDR, will allow direct settlement of the two countries' own currencies in transactions under all open current and capital accounts, the PBOC said in a statement.

Chinese government shell firms buy cash-strapped companies for first time - Reuters Local government shell companies in China bought into struggling privately run listed firms for the first time last year, veering from their typical remit of financing infrastructure projects to pump over $2 billion into cash-strapped businesses.

IPhone Hits Double-Digit Growth in China, Official Data Show - Bloomberg The iPhone maker’s shipments in China grew 18.7% year on year in December to roughly 3.18 million units, according to Bloomberg calculations based on government data on overall and Android device shipments. The increase marked an acceleration from the prior months, which were buoyed by the iPhone 11’s release in September.

China Touts Foreign Access to Oil & Gas Ahead of U.S. Trade Deal - Bloomberg China said it will open up oil and gas exploration to private and foreign firms, offering further details of a policy that will help assuage concerns over access to the industry ahead of next week’s signing of an interim trade deal with the U.S.

I-Mab Biopharma is First China Biotech IPO in 2 Years in U.S. - Bloomberg I-Mab started taking orders on Monday for the IPO, which could raise as much as $111 million -- down from the $200 million people familiar with the matter said last year. If the deal goes through, it will be the first U.S. listing by a Chinese biotech company since Zai Lab Ltd.’s $173 million offering in 2017, according to figures compiled by Bloomberg.

Yicai Global - Landsea Green Skids After Chinese Property Firm Reveals Plan to Buy US Developer The acquisition is a major milestone for Landsea Homes because it will help the firm expand in Arizona's residential project market, further growing its portfolio. Delaware-based Landsea Homes started in the US in 2013.

Red Bull Inventor Suffers Setback in China Legal Dispute - Caixin A Beijing court has rejected a request by the Thai inventor of popular energy drink Red Bull to forcibly liquidate its Chinese joint venture, according to a Sunday announcement (link in Chinese) by the company. Red Bull’s Thai creator, Bangkok-based T.C. Pharmaceutical Industries Co., has been embroiled in a dispute with its Chinese partner, Beijing-based Reignwood Group, since 2014.

China's Currency Push - The Chinese Yuan expands its footprint in Europe | Mercator Institute for China Studies European countries have competed with each other to attract CNY clearing business, so the necessary trading infrastructure is largely in place. International use of the CNY is being held back by restrictions on foreign access to China’s financial markets. There is room for more growth, but the pace is likely to be slow.

Chinese Central Bank Plans to Launch Second Generation Personal Credit System in Late January – China Banking News At the 2020 PBOC Work­ing Meet­ing held on 5 Jan­u­ary the Chi­nese cen­tral bank called for “steadily dri­ving up­grade of the sec­ond gen­er­a­tion credit sys­tem, and strength­en­ing per­sonal credit in­for­ma­tion se­cure man­age­ment and per­sonal pri­vacy pro­tec­tion.”

Yicai Global - Shenzhen Tempers Outlook This Year After 7% GDP Rise Passed USD370 Billion in 2019 The gross domestic product of China's southern economic and tech powerhouse of Shenzhen topped CNY2.6 trillion (USD370 billion) last year in 7 percent growth that attained projected targets, according to the city government's work report. The megacity's main development goals tamp down expectations for this year, however, projecting 6.5 percent growth of regional GDP, and an about 4.5 percent increase in the general public budget revenue

Chairman Mao’s Favorite Carmaker Red Flag Plans Major Electric Expansion - Bloomberg The marque will introduce 21 new models over the next five years, 18 of them electric, said Xu Liuping, chairman of the brand’s parent, at a Beijing event late Wednesday. Red Flag targets a doubling in sales this year to 200,000 cars, and wants annual deliveries to reach 1 million in 2030, he said.

Oyo business model under pressure in China | Financial Times $$ Billions of dollars in backing, including from its biggest investor SoftBank, has helped fuel Oyo’s rapid expansion in China. It claims to have signed up 19,000 hotels — with 900,000 rooms — in 338 cities since 2017, making it the biggest hotel chain in the country. But Chinese hotel owners complain Oyo has cut the payments it had promised when they signed up.

China Purchases Brazilian Soybeans Before Trade Deal With U.S. - Bloomberg China is picking up soybean cargoes in Brazil, dashing hopes for big American sales immediately after a partial trade deal is signed with the U.S. next week, according to people familiar with the matter.

China Issues New Rules to Clean Up Financial Leasing Industry - Caixin The China Banking and Insurance Regulatory Commission (CBIRC) issued a set of draft rules (link in Chinese) Wednesday for financial leasing companies, which are supposed to provide financial and leasing services to companies, often for purchasing large equipment. However, the industry has drawn regulators’ attention after years of burgeoning growth as many companies engaged in illegal fundraising, risky investments or even fraud...China had 10,900 financial leasing companies with total assets of 4.07 trillion yuan as of the end of June, almost all of which had foreign investments. According to a CBIRC-backed industry data system, only 2,985 of them are conducting normal business operations, while fully 72% have either halted business or are mired in crisis.

British Steel rescue nears after backing from Chinese regions | Financial Times $$ A rescue deal for British Steel has edged closer after bidder Jingye received support from regional authorities in China to push through the takeover of the ailing UK steelmaker.

Chinese Fertilizer Firm Becomes Test Case for Local Bond Recasts - Bloomberg Qinghai Salt Lake Industry Co. is a state-owned firm located in sparsely-populated province in northwest China that mainly produces potash. A local court in the province threw a lifeline to Qinghai Salt Lake in September by accepting a creditor’s request to restructure the firm amid its financial troubles...The company has defaulted on three outstanding bonds amounting to about 6.2 billion yuan ($894 million). It owes a total of 45 billion yuan to its creditors, according to an initial confirmation by the bankruptcy administrators, the company said in a filing on Dec. 26.

Politics and Law

初心易得,始终难守——习近平总书记“六个必须”对“不忘初心、牢记使命”主题教育提出新要求--理论-人民网 The message out of the meeting Wednesday to sum up the “stray true to the founding mission” campaign is that the efforts to stay true will never end. This piece on People's Daily talks about the new "6 musts" Xi raised in his speech (see yesterday's newsletter, Essential Eight item 1, for what those 6 musts are)

Page 1 People’s Daily commentary on the end of the campaign - 新时代党的自我革命的生动实践 - 本报评论员 《 人民日报 》( 2020年01月09日 01 版) 在充分肯定成绩的同时,我们也要清醒看到存在的问题。比如,有的领导干部理论学习不深、不透、不系统,学用脱节,运用党的创新理论推动工作的能力不足;有些问题的整改还没有到位,一些深层次矛盾和问题还没有从根本上破解;有的基层党组织建设还比较薄弱,联系服务党员、群众的机制还不够健全顺畅;有的地方仍然存在形式主义、官僚主义,急于求成、急功近利,增加基层负担,等等。群众最担心的是教育一阵风、雨过地皮湿,最盼望的是保持常态化、形成长效机制。我们要善始善终、善作善成,把全面从严治党要求真正落到实处。While fully affirming our achievements, we should also be soberly aware of the existing problems. For example, some leading cadres' theoretical learning is not deep, thorough or systematic, their learning and application are disjointed, and their ability to use the party's innovation theory to promote work is insufficient. Some problems have not been rectified, and some deep-seated problems have not been fundamentally solved. Some community-level party organizations are still weak, and the mechanism for contacting and serving party members and the masses is not sound enough. In some places, there is still formalism, bureaucracy, eagerness for success, quick success and quick profits, and increasing the burden on the grassroots. What the masses are most worried about is education. What they want most is normalcy and a long-term mechanism. We must make a good beginning and a good ending, and do a good job, so as to ensure full and strict party governance.

[视频]全国统战部长会议在京召开 汪洋出席并讲话_CCTV Wang Yang convenes meeting of the top cadres in the United Front system to set agenda for 2020-”Wang Yang fully affirmed the achievements of the united front system in the past year. He stressed the need to fully implement the spirit of the fourth plenary session of the 19th CPC central committee, dig deeper into the significant institutional advantages of the united front, figure out what should be "upheld and consolidated, improved and developed", and make due contributions to the modernization of the country's governance system and capacity. We need to focus on building a moderately prosperous society in all respects, deepen targeted poverty alleviation efforts by "ten thousand enterprises to help ten thousand villages", guide the democratic parties to continue carrying out democratic oversight of poverty alleviation efforts, and rally people from all walks of life outside the party to tell good stories about China and deliver positive energy"

China Mulls New Reporting Mechanism To Protect Women Victims - SixthTone Announced Tuesday, the joint notice from the Supreme People’s Procuratorate and the All-China Women’s Federation proposes that, whenever local women’s federation branches become aware of cases of domestic violence, sexual assault, or other civil rights violations, they should promptly report them to local prosecutors. The prosecutor would then be required to report back to the women’s federation once the case is resolved, according to the notice, which is now open to public feedback before being considered for formal adoption.

Over 6.5 mln bid farewell to poverty in central Chinese province - Xinhua A total of 6.51 million people in central China's Henan Province have shaken off poverty, the provincial anti-poverty authority said...The province still has 350,000 people living in poverty, according to official sources. // Comment: and those 350k will officially out of poverty by the end of 2020 or it will be a massive political problem

Ethnic Discrimination in Criminal Sentencing in China by Yue Hou, Rory Truex :: SSRN This paper presents the first analysis of ethnic discrimination in sentencing patterns in the People's Republic of China, focusing on drug cases in Yunnan province. We posit the "problem minority" hypothesis, which holds that discrimination in an authoritarian system emerges when an ethnic group becomes associated with behavior that generates social instability. On average, minority defendants in Yunnan have sentences that are about 1.5 to 8.0 months longer than Han defendants that have committed similar drug crimes. Further analysis of data from all provinces reveals that this bias is largest for groups heavily involved in the drug trade. Sentencing is particularly harsh in autonomous counties and prefectures where minorities are concentrated.

Foreign and Defense Affairs

Iran, US embassies engage in word war - Global Times Iran and the US are not only engaged in military tensions, as their embassies in China engaged in a verbal fight on China's Twitter-like Sina Weibo.  The Iranian embassy's Chinese-language posts about the country's retaliatory attacks on the US military bases in Iraq on Sina Weibo won overwhelming attention from Chinese netizens.

Chinese internet users bombard US embassy’s Weibo page with anti-America comments | South China Morning Post Under a post on the embassy’s account on Weibo – China’s Twitter-like platform – in which US Secretary of State Mike Pomepo’s quote, “the world has become a safer place” since Trump made the “right decision” to kill Soleimani was translated into Chinese, people described the US as “shameless” and “the most hypocritical country” in the world. “The US is the largest terrorist group in the world!” said another post. “China is the safest place in the world”.

United States and Canada Finalize Action Plan on Critical Minerals Cooperation - United States Department of State Deputy Assistant Secretary of State for Western Hemisphere Affairs Cynthia Kierscht and Associate Deputy Minister of Natural Resources Canada Shawn Tupper finalized the U.S.-Canada Critical Minerals Action Plan in December 2019.  This achieves a goal set by President Trump and Prime Minister Trudeau in June 2019.  Cooperation under the Action Plan includes securing the supply of critical minerals for strategic industries and defense; improving information sharing on critical mineral resources; engaging with the private sector; and working together in multilateral fora and with third countries.

Number of Chinese vessels entering contiguous zone of disputed Senkaku/Diaoyu islands reached record level in 2019 | Jane's 360 The number of Chinese government vessels entering the contiguous zone of the Japanese-controlled but Chinese-claimed Senkaku/Diaoyu islands reached a record level in 2019, according to Japan Coast Guard (JCG) data that was recently published by the Ministry of Foreign Affairs (MoFA) in Tokyo.

Japan and China to craft new political document for Xi Jinping's state visit | Kyodo News Japan and China have decided to craft a new major political document that will lay the foundation for their future relations, a source close to the matter said Thursday. The so-called fifth political document will be announced when Chinese President Xi Jinping visits Japan as a state guest this spring, according to the source.

China's top legislator meets Japanese parliament delegation - Xinhua Li [Zhanshu] said the NPC is ready to work with the Japanese parliament to maintain the political foundation of bilateral relations, facilitate pragmatic cooperation in various fields, promote local and youth exchanges, give full play to the mechanism of exchanges between legislative bodies and make contributions to promoting China-Japan relations in the new era

China is taking its ideological fight abroad | Financial Times $$ There are justified concerns in some countries about a rise in xenophobia and “reds under the bed” targeting of anyone who is ethnically Chinese. The world must guard against such racism, not least because it would be deeply perverse to punish the very people who have moved to western democracies to get away from a repressive system. But ignoring China’s bullying behaviour would be an equally egregious form of racism towards ethnically Chinese compatriots since they are the primary targets of Beijing’s intimidation and overseas influence operations.

Thailand’s Press Warms to Chinese State Media | Council on Foreign Relations After the respected Khao Sod and Matichon Group inked a content sharing deal with Xinhua, other Thai news outlets followed suit. By November 2019, as Khao Sod itself reported, outlets including Thai state broadcaster NBT, the publication Manager Online, a mass market outlet with a smaller following than Khao Sod, and Voice Online, the website of one the most progressive, toughest television stations in Thailand, had signed deals with Xinhua. (Voice TV has proven so critical of the Thai military that the armed forces had repeatedly banned Voice TV from the airwaves for brief periods of time.) In total, by the end of the year twelve Thai language outlets had signed content sharing deals with Xinhua.

As US and Iran step back from the brink, China faces energy security risk | South China Morning Post China continued to import Iranian oil, but Chinese companies appeared to be more hesitant to do business with Iran out of fear of financial penalties, according to a report by the US Institute of Peace. The research agency said China had imported only 210,000 barrels per day of Iranian oil in June 2019, the lowest in nearly a decade and 60 per cent below imports from Iran in June 2018.

One American and One Chinese National Indicted in Tennessee for Conspiracy to Commit Theft of Trade Secrets and Wire Fraud | OPA | Department of Justice The BPA-free trade secrets allegedly stolen by these individuals belonged to multiple owners and cost an estimated total of at least $119,600,000 to develop.  Until recently, bisphenol-A (BPA) was used to coat the inside of cans and other food and beverage containers to help minimize flavor loss, and prevent the container from corroding or reacting with the food or beverage contained therein.

China contributes to global anti-terror cause with deradicalization efforts in Xinjiang: FM - Xinhua China has made important contributions to the global fight against terrorism with its deradicalization efforts in Xinjiang, Chinese State Councilor and Foreign Minister Wang Yi said on Wednesday. Speaking at a joint news conference with Egyptian Foreign Minister Sameh Shoukry in Cairo, Wang stressed that the issue of Xinjiang is solely China's internal affairs. He said that what happens in Xinjiang is an issue of fighting separatism and terrorism, rather than an issue of human rights or religion...The company recently relocated from the Philippines because of tightened scrutiny by authorities

Counterterrorism and Preventive Repression: China's Changing Strategy in Xinjiang | International Security | MIT Press Journals In 2017–18, the Chinese Communist Party (CCP) changed its domestic security strategy in Xinjiang, escalating the use of mass detention, ideological re-education, and pressure on Uyghur diaspora networks. Commonly proposed explanations for this shift focus on domestic factors: ethnic unrest, minority policy, and regional leadership. The CCP's strategy changes in Xinjiang, however, were also likely catalyzed by changing perceptions of the threat posed by Uyghur contact with transnational Islamic militant groups in Southeast Asia and the Middle East, and a corresponding increase in perceived domestic vulnerability. This threat shifted from theoretical risk to operational reality in 2014–16, and occurred alongside a revised assessment that China's Muslim population was more vulnerable to infiltration by jihadist networks than previously believed. Belief in the need to preventively inoculate an entire population from “infection” by these networks explains the timing of the change in repressive strategy, shift toward collective detention, heavy use of re-education, and attention paid to the Uyghur diaspora. It therefore helps explain specific aspects of the timing and nature of the CCP's strategy changes in Xinjiang.

Chinese FM calls for deepening China-Arab strategic partnership - Xinhua Wang made the remarks in his meeting with Arab League (AL) Secretary General Ahmed Aboul Gheit Tuesday in Cairo, Egypt. Wang stressed that China is a trustworthy friend of the AL. Chinese President Xi Jinping has called for building a China-Arab community with a shared future, which offers the direction for the development of the China-Arab relations and will lead the two civilizations to make more contributions to the building of a community with a shared future for humanity, Wang said.

于大变局中彰显使命担当 - 乐玉成 《 人民日报 》( 2020年01月09日   09 版) - Le Yucheng in People's Daily 当今世界正经历百年未有之大变局。在大变局中,世界面临的不稳定性不确定性突出,面临何去何从的选择。习近平主席指出:“中国共产党是为中国人民谋幸福的政党,也是为人类进步事业而奋斗的政党。中国共产党始终把为人类作出新的更大的贡献作为自己的使命。”新中国成立以来,中国坚定不移走和平发展道路,并以实际行动为世界和平与发展作出重要贡献,树立了负责任大国形象。党的十八大以来,在习近平外交思想指引下,我们党统筹国内国际两个大局,牢牢把握服务民族复兴、促进人类进步这一主线,不断推进外交工作理论和实践创新,取得一系列历史性成就,成为不确定世界的“稳定器”,向世人展现大党、大国的使命担当 The world is undergoing profound changes unseen in a century. In the great changes, the world is faced with outstanding instability and uncertainty, and faced with the choice of which way to go. As President xi jinping pointed out, "the CPC is a political party that seeks happiness for the Chinese people and strives for the cause of human progress. The CPC has always made it its mission to make new and greater contributions to mankind." Since the founding of the People's Republic of China in 1949, China has unswervingly followed the path of peaceful development, made important contributions to world peace and development with concrete actions, and established itself as a responsible major country. Since the eighteenth congress under the guidance of Xi Jinping Diplomatic Thought…

欢迎更多外国人士走进梁家河这样的中国基层--国际--人民网 外交部发言人耿爽8日说,欢迎更多外国人士走进梁家河这样的中国基层,感知中国奋勇向前的强劲脉搏。耿爽在例行记者会上说,7日,老挝总理通伦访问陕西省期间,走访了梁家河,这里是中国国家主席习近平曾经工作生活过的地方。 "Foreign ministry spokesperson geng shuang said Thursday that more foreigners are welcome to visit Chinese communities such as liangjiahe to feel the strong pulse of China moving forward. On July 7, during his visit to shaanxi province, Lao prime minister thongloun visited liangjiahe, a place where Chinese President Xi Jinping once worked and lived, geng said at a regular press briefing." //How many foreign leaders have made the pilgrimage to Liangjiehe?

Hong Kong and Macao

卸任中联办主任后,王志民新职位公开 Wang Zhimin is now deputy head of the Central Party History Research Institute, with full ministerial rank. Interesting place to put him if he is going to end up in trouble. so maybe he will be ok. Wang's listing on the leadership page of the Institute

Commissioner's office of Chinese foreign ministry in HKSAR says U.S. not qualified to point fingers at Hong Kong affairs - Xinhua Before pointing fingers at Hong Kong affairs, the United States should first reflect on itself that how U.S. police enforce the law at home and how the country acts against law and reason abroad, a spokesperson of the office said in a statement. U.S. politicians are not qualified to talk about international rules, to smear and attack the Hong Kong Police Force and to make irrepressible remarks on Hong Kong affairs, the spokesperson said.

Hong Kong protesters have been receiving training from foreign forces, city’s security chief says, while also revealing more than 3,700 phones were seized and broken into | South China Morning Post John Lee said no evidence linked recent seizures of weapons and bombs to overseas terrorist organisations, but suggested some protesters were not acting alone

World's biggest debate contest axed livestream of Hong Kong topic as Chinese spectators staged walkout | Hong Kong Free Press HKFP Last Friday, four top teams debated the motion “This House, as China, would grant universal suffrage to Hong Kong citizens” during the grand finals of the World Universities Debating Championship’s (WUDC) open category. The event was held at Assumption University in Bangkok, Thailand and drew over 240 participating universities from 50 different countries.

Taiwan

Taiwan: fears grow over China’s invasion threat | Financial Times $$ The Pentagon, the US Indo-Pacific Command and Taiwan’s defence ministry will this year complete an assessment of the island’s current defences and war plans. Washington has also stepped up its observation of Taiwan’s military exercises. US officials say there is discussion of low-key joint drills that would ensure the two forces build a basic understanding of how they and US ally Japan would communicate in the event of a war.

Tech and Media

Yicai Global - WeChat's 'Short Content' Function to Diversify Data Sources, Wrest Back Human Control Tech titan Tencent Holdings social messaging app WeChat with its 1.1 billion users will unveil a 'short content' function to achieve information diversity to give users more control over their information flow, Zhang Xiaolong, the app's developer, said today.

AWS Marketplace Formally Launched In China | ChinaTechNews.com AWS Marketplace China is a carefully selected digital product catalog, through which users can easily search, test, deploy and manage third-party software needed for their system operation in AWS China (Beijing) and AWS China (Ningxia).

Bytedance rebrands Huoshan to support Douyin · TechNode As Douyin’s growth decelerates in an increasingly saturated short video market, Bytedance has been trying to draw users from lower-tier cities—Huoshan’s core segment—to join the platform, escalating its existing competition with rival app, Tencent-backed Kuaishou.

China Box Office: Slow Growth Marks "New Normal" | Hollywood Reporter Hollywood box office growth in China officially flatlined in 2019 — and there is little reason to believe that conditions in the world's No. 2 theatrical territory will improve anytime soon, analysts caution. Total ticket sales at Chinese cinemas climbed to $9.2 billion (RMB 64.3 billion) in 2019, up 5.4 percent from 2018. That's a far cry from the galloping double-digit growth that characterized most of the past decade, but it's still a respectable uptick for a market of China's scale

Society, Arts, Sports, Culture and History

Former coach of China’s women’s volleyball team Chen Zhonghe outraged at ‘ugly’ film portrayal | South China Morning Post The former coach of China’s women’s national volleyball team, who led them to victory in the 2003 World Cup and the 2004 Athens Olympics, says he is outraged at the “ugly” way in which he has been portrayed in an upcoming film. The movie, titled Chinese Women’s Volleyball Team, which is set to be released across the country on January 25 – the first day of the Lunar New Year holiday – tells the story of the team over the past four decades.

Alibaba praised by China's gay community for ad recognizing same-sex couples - Reuters In the 20-second spot, a young man enters his home and introduces a male companion as “Kelvin” to his mother. The camera cuts to a father figure leering at the couple with suspicion, and then to two girls sitting at the table who giggle knowingly. The ad ends when Kelvin refers to his partner’s father as “Dad,” causing an awkward silence at the table.

The ad:

In Depth: A Chinese Con Man’s Two Weeks in Nepal - Caixin A couple of days before the Nepali cops detained 122 Chinese nationals Dec. 24 for suspected involvement in financial crimes, Zhou fled to China from an online gaming company where he worked for about two weeks in Katmandu, the Nepali capital. The employer, whose name Zhou declined to disclose out of safety concerns, was not on the list for the raid, but it carries out the same deceptive scheme as those that were hit. These businesses are suspected of using social media to con wealthy single or divorced Chinese women out of money...The company recently relocated from the Philippines because of tightened scrutiny by authorities

Energy, Environment, Science and Health

创新,在复兴的征程上——以习近平同志为核心的党中央关心科技创新工作纪实-新华网 Long Xinhua piece on how the Party center with Xi as the core has advanced work on science and technology innovation

China improves S&T award system to spur innovation - Xinhua China has improved its award system for scientific and technological achievements to spur innovation and foster high-quality development, according to the National Office for Science and Technology Awards. China has enriched its national science and technology award system by setting up the State Preeminent Science and Technology Award, the State Natural Science Award, the State Technological Invention Award, the State Scientific and Technological Progress Award and the China International Science and Technology Cooperation Award.

Chinese paddlefish, one of the world's largest fish, declared extinct - National Geographic The species gradually declined over the last century thanks to overfishing; in the 1970s, 25 tons of paddlefish were harvested per year on average. But what really did it in, the scientists conclude, were dams—specifically the Gezhouba Dam, built on the main stem of the Yangtze, a little over a thousand miles from the sea.

Chaguan - To preserve the Yangzi’s fish, officials are using a blunt method | Chaguan | The Economist A new report by government scientists has declared one of the Yangzi’s rarest species, the giant Chinese paddlefish, functionally extinct. Officials this month unveiled their remarkable solution. By the end of this year all fishing on the Yangzi and its major tributaries will be banned for ten years. This will cast 280,000 registered fishermen out of a job. More than 300 areas were closed on January 1st, shortly after local officials brought in mechanical diggers to smash boats and haul them away.

China Weighs Ending Subsidies for New Offshore Wind Farms - Caixin Even if China scraps national subsidies for new wind power projects, local governments would still be encouraged to offer subsidies of their own as an incentive to build new offshore wind farms, the state-run Shanghai Securities News reported Tuesday. Offshore wind farms are typically built in the shallow coastal waters, where winds are steadier than on land.

China ‘must find source’ after identifying Wuhan pneumonia as new virus from Sars family | South China Morning Post Dr Gauden Galea, the World Health Organisation (WHO) representative to China, described the preliminary identification of the new coronavirus in a short period of time as “a notable achievement” that would help authorities in other countries to detect and respond to outbreaks.

Greenpeace releases first-ever clean energy scorecard for China’s tech industry - Greenpeace East Asia Greenpeace East Asia and the North China Electric Power University have released their first-ever renewable energy ranking of China’s tech giants. Data center operator Chindata took the top spot, with a score of 80 out of 100. Alibaba received a score of 60, edging out Tencent, GDS and Baidu, which scored 52, 48 and 46, respectively.

Jobs and Events

DealPro seeks a staff writer - Talking Biz News DealPro, a new weekly magazine co-founded by a group of former New York Times and Wall Street Journal writers and editors, seeks a staff writer. The Boston-based magazine is focused entirely on in-depth and investigative stories about China’s economic rise // Founded by David Barboza